Things have gotten so bad at the U.S. Postal Service that even the traditionally profitable holiday period is a loser – much like the rest of the year. How bad? In the final quarter of 2011, the Postal Service recorded $3.3 billion in losses.
Without any changes to the troubled business model of the USPS, another $18 billion in losses are estimated by 2015.
Lawmakers have proposed a 5-year plan to streamline operations at the Postal Service, highlighted by a 5-cent increase in the cost of a first-class stamp.
It’s unclear how the public will support this plan. Business owners throughout the country, particularly those at the helm of smaller ventures, are bemoaning the increased mail costs, with stamps rising to 50 cents from 45 cents.
But lawmakers say there is no other answer. The 5-year plan would trim about $20 billion, and even then, that would still leave another $10 billion in savings for Congress to find by 2017.
None of the proposals in the 5-year plan are new: Home delivery would be cut from six days a week to five and thousands of offices and mail processing plants would be axed.
In addition, the plan calls for legislation to change the health care plan for postal workers in another cost-saving move. The current staffing levels of 283,000 workers would be reduced to 155,000 by 2016, many through various retirement inducements.
The National Association of Letter Carriers is not on board yet with the proposed changes, which would slow mail delivery by a day.
“Charging more for reduced service is not a rational plan for any business, including the U.S. Postal Service, Fredric Rolando, president of the National Association of Letter Carriers, said to Money.CNN.com.
It’s not clear when Congress will consider the proposed overhaul of the Postal Service, though many experts say it is likely not to happen for at least a month.
Despite the huge deficit and grim picture, some lawmakers familiar with the problem say the Postal Service can be saved.
“This is a dire situation, but it is not hopeless,” said Sen. Tom Carper, a Democrat from Delaware who is in charge of the subcommittee that regulates the U.S. Postal Service. “We can save the Postal Service for future generations — and without further burdening taxpayers — if we act decisively and strategically.”
The Postal Service was created with the intention of operating as a self-sufficient arm of government. However, massive drops in first-class mail volume, due in part to the Internet, have taken its toll. The Postal Service has borrowed $12.9 billion from the government recently to make ends meet.